What is Wage Loss Insurance: The Definite Guide
You may notice a lot of families where the only person earns and gives full financial support. Think that this person cannot work now; who will provide financial support for this family? Or you are a single person, and you don’t have any family. When you will be unable to work, how will you manage money for meeting the basic needs?
For these circumstances, wage loss insurance was invented. There have many people who don’t have any idea about this insurance policy. That is why, in this article, we will conduct a detailed discussion about what is wage loss insurance. We will give you every important information regarding this topic. Hopefully, this article is going to be very informative for you. Let’s start.
What is wage loss?
Wage loss is a calculated amount of employees’ income that they were unable to for the injury. The amount will be counted from the day of the accident to the settlement day.
Here the wage loss amount will be counted by the income verification statement collected from the employer. The sick time or vacation pay, overtime, bonus payment, lost sales commission, and many other payments will be also be counted and add with that amount.
There have some factors that affect the amount of wage loss. These are as follows:
- Victim’s age and the health condition after the injury
- How long the victim will be unable to work
- The life expectancy of the victim after the recovery
- How many abilities will be limited to the victim?
- The amount of the years left before the expected retirement.
- The salary is fixed or fluctuating.
- The ethics and the career goals of the victim
These are the most important factors that influence the amount of wage loss.
What is wage loss insurance?
The wage loss insurance is the insurance against wage loss. That means it’s insurance against the risk of losing all the payment you would get if you were not injured. It is like protection at a crisis time. All the credits of this insurance policy go to Robert Litan and Lori Kletzer.
They are the persons who proposed the idea of wage loss insurance. This insurance is very significant for the middle-class and lower-class people because most of them don’t have any savings to continue their life easier by the savings. All the earns are expensed by meeting their basic need. Wage loss insurance is very significant for many reasons. Among them we are giving some:
- Your income will not stop even when you are unable to work for a long time.
- You will easily be able to customize this insurance. This insurance is enough customer-friendly.
- Wage loss insurance will take care of your child when you are injured and in bed.
- In the case of this insurance, you will claim in a very straightforward way.
- And ultimately, it will help you to get back to normal life very quickly.
Besides, there has a lot of significance you will get for wage loss insurance. We have given the most important some.
What is included in insurable earnings?
When you get your salary, you get different types of payments like house rent, transportation, and medical fees accumulated. Like this, when you will get wage loss indemnity, there have many things that will be included with the amount. These are as follows:
Firstly, you will get the basic salary you get in every month even without working a day.
You will get every commission you get from when you work or what other workers are getting at that moment.
If you would work at your office that month, you may get a vacancy which would be paid. Now you will receive that payment according to the CRA (Canadian Revenue Agency).
Room and board
Room and board are lodging and food bills, which is a part of wages. You will get these bills also.
The bonuses you would get if you were sick will be counted with the total amount of your compensation.
Value of all other allowances and tax benefits
There have many other allowances with the salary. All of the subsidies will be counted with the amount of your compensation. You will also get tax benefits there.
Mainly these are the pays that will be included with the amount of compensation you will get.
What is wage loss indemnity?
Wage loss indemnity is one kind of compensation given to the victim for loss of salary during injury. Every company has a different plan for wage loss indemnity.
So, you will get the payment of wage loss indemnity under that plan. In some companies, you will have an opportunity to make your plans. The benefits of those plans are dependent on it is a group plan or not.
Is wage loss replacement income taxable?
There are different types of wage loss insurance in Canada. The Canadian Revenue Agency started this insurance, considering the helplessness of the poor workers. This was one of the most significant systems they have started.
It’s an agreement between employer and employee involved in providing payment when workers are unable to work. The amount of wage loss that you receive is taxable, like lump-sum payments. You can find some differences in a different province. But in all of the provinces, the law is more or less the same.
Wage loss insurance vs. sick pay?
Sick pay, paid sick days, or sick leave are off-time when you are sick, and at that time, you don’t have to work to earn money. At that time, you can stay home to get well soon or meet the health needs without losing pay. It is quite different from wage loss insurance. As we have said before, wage loss insurance is financial support when you are injured by accident or something like that.
That means this one is for serious injury by accidents either in the workplace or outside. But sick pay is for a few days when you are physically or mentally sick. The wage loss amount is always big, and the time is lengthy here.
In the case of sick pay, time is not lengthy, like wage loss. It is one week to three weeks. Here the amount is also lower. Wage loss insurance is more popular than sick pay. These are basically the difference between wage loss and sick pay.
Nowadays, wage loss insurance is very popular in Canada. Almost every company started including this policy in their office. This insurance is very helpful for the employees. You don’t have to think about managing money when you are unable to work.
In this article, we have given you a definite guide about what is wage loss insurance. We hope now, after reading this article, you don’t have any confusion regarding this topic. If it is, then let us know by comment. At the same time, if you have any doubt, leave a comment below. We will clear your doubt as soon as possible.